Question

help please

if the on-campus demand for soda is as follows: Price (per can) Quantity demanded (per day) $2.25 30 2.00 40 1.75 50 1.50 60 1.25 70 1.00 80 0.75 90 0.50 100 and the marginal cost of supplying a soda is $1.25, what price will students end up paying in: Instructions: Enter your responses rounded to two decimal places. a. A perfectly competitive market? $ b. A monopolized market? $ < Prev 2 of 3 !!! Next >

Answer 1

MC = 1.25

TR = P * Q

MR = Change in TR / Change in Q

P	Q	TR	MR
2.25	30.00	67.5
2	40.00	80	1.25
1.75	50.00	87.5	0.75
1.5	60.00	90	0.25
1.25	70.00	87.5	-0.25
1	80.00	80	-0.75
0.75	90.00	67.5	-1.25
0.5	100.00	50	-1.75

a. In perfectly competitive market, profit maximization occurs where P = MC

Setting P = MC = 1.25

Price = 1.25

b.

In monopoly market, profit maximization occurs where MR = MC

we see from above table that MR = MC = 1.25 at output level 40 and price at this level of output is 2.00

Price = 2.00